LMAX Exchange. Exchange style trading for spot FX

David Mercer

LMAX Exchange is the first MTF for FX, regulated by the FCA.
Established to deliver the benefits of exchange quality execution
to both buy-side and sell-side trading institutions, LMAX Exchange
brings market participants together in an anonymous, order-driven
and fully transparent environment

The exchange style execution model, which is at the core of an
MTF concept, is the most effective way to trade liquid products,
such as spot FX. Just as on an exchange, orders are matched in
price/time priority but trading is still bi-lateral with FX
trades cleared through the prime broker network. Furthermore,
LMAX Exchange is not a market-maker, and unlike many ECNs, the
open order book is driven by streaming, non 'last-look' limit
orders supplied by our liquidity providers.

David Mercer, CEO of LMAX, explains that, "The existing client
base is mostly institutional and includes broker dealers,
proprietary trading firms, money managers and funds." However, he
says "the client demand for transparent, precise, consistent, low
latency execution exists across all FX client segments and this
is the opportunity that LMAX Exchange is addressing".

The LMAX Exchange business model is also at the forefront of the
regulatory changes that are advocating greater transparency,
on-exchange trading and centralised clearing of FX derivatives.
LMAX Exchange, though only for spot FX and metals, is leading the
industry's transformation towards transparency. From an execution
standpoint, LMAX Exchange already offers on-exchange trading as
well as pre- and post-trade transparency. From the clearing
perspective, LMAX Exchange technology is set up and enables all
three clearing models: prime brokerage, central counterparty
(CCP) and centralised clearing through LCH.Clearnet.

In summary, LMAX Exchange addresses key industry challenges, such
as the lack of transparency of the true cost of OTC traded FX,
and the lack of precise consistent and reliable execution in FX
trading.

Expansion into other client segments, including the recently
launched LMAX InterBank, extension of the global client base and
potential diversification into other on-exchange traded FX
products are planned.